 Geographic price dispersion in retail markets: Evidence from micro-dataJournal of Macroeconomics, 2010, vol. 32, issue 4, 1169-1177 Abstract: Using an extensive micro-price data of 266 retail goods and services across US, EU and OECD cities between 1990 and 2005, we study characteristics of geographic dispersion of deviations from the Law of One Price. We find that the magnitude of price dispersion is a function of the characteristics of both the type of good and set of locations under examination. Higher share of non-traded inputs and lower tradability of goods are both found to contribute to geographic price dispersion, with the former typically dominating in explanatory power. The role of tradability of good in accounting for the price dispersion is more significant as we move beyond an economic geography, while non-traded input level matters relatively more if we move to the interior of this geography. Our evidence suggests that the models of real exchange rates should incorporate the classical distinction between traded inputs and local inputs as well as a role for relative markups and traditional trade costs. Keywords: Price; dispersion; Law; of; One; Price; Non-traded; input; Tradability (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jmacro:v:32:y:2010:i:4:p:1169-1177 Access Statistics for this article Journal of Macroeconomics is currently edited by Douglas McMillin and Theodore Palivos More articles in Journal of Macroeconomics from Elsevier |
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